The strong economic recovery that followed the Covid-19 pandemic; the volatility recorded in fossil fuel marketwhich has raised concerns about energy securityespecially after theRussian invasion of Ukraine. But also the policies adopted by governments to encourage energy transitionfrominflation Reduction Act (strategic plan to facilitate the energy transition through investments and tax rebates for companies operating in the United States) in the United States to the various initiatives adopted in Europe, Japan and China. These are some of the factors that are driving the investment in clean energy. A race that should continue this year as well, with global investments in the sector expected to rise to 1.7 trillion dollars, with solar energy set to eclipse oil production for the first time. This is what emerges from the last one World Energy Investment report published byInternational Energy Agency (IEA).
The push of the sun
According to the report, approximately 2.8 trillion dollars should be invested globally in the energy sector in the current year; of these, more than half ($1.7 trillion) are expected to go to clean technologies, such as electric cars, energy storage systems, heat pumps, low-emission fuels and nuclear energy. The rest, just over a trillion dollars, will be used in the gas, oil and coal sectors. Furthermore, according to the survey, investments in clean energy will increase by 24% between 2021 and 2023, while the expected increase for fossil fuels in the same period of time is 15%. Growth will mainly be driven by renewable energy, electric cars and heat pumps, whose global sales have recorded double-digit annual growth since 2021. In the current year, 90% of total investments in electricity generation are expected to be in low-emissions energy, led by the solar. At the same time, also the sales of electric cars they are expected to increase by a third this year, after the record reached in 2022. “Clean energy moves fast, much faster than many people realize. As emerges from the trend relating to investments, which sees clean technologies advancing more and more compared to fossil fuels”, he underlines Fatih Birol, executive director of the IEA, who adds that “for every dollar invested in fossil fuels, approximately 1.7 dollars are used in clean energy. Five years ago, this ratio was one to one. A striking example is the investment in solar, which is expected to exceed the amount of investment destined for oil production for the first time”.
Emerging economies still behind
The investments in oil and gas instead, they should increase by 7%, returning to 2019 levels. The oil companies that are investing more than in the pre-pandemic period are mainly the national oil companies of the Middle East. Producers made record profits last year as fuel prices soared, the report said, but most of the cash flow went to fund dividends, share buybacks and debt repayments, while only less than half was invested in new supplies. The global demand for coal instead it reached an all-time high in 2022 and this year investments are expected to exceed by almost six times the levels projected in 2030 in the Net Zero scenario (the path to net-zero greenhouse gas emissions by 2050, consistent with the more ambitious goal of the Paris Agreement).
The report also highlights a disparity between different areas of the world. In particular, more than 90% of the increase in investment in this area is due to financial commitments from China and advanced economies. While the developing economies are furthest behind. Even if some positive cases stand out: among these, the dynamism of investments in solar energy in India and in renewables in Brazil and in some parts of the Middle East. However, the report concludes, high interest rates, unclear regulatory frameworks, high cost of capital and poor network infrastructure are holding back investment in many developing world countries.